Rafael Grillo

WaMu on the Brink

Harrison's comments seem quite logical. WM does not need much external help to continue going down. Just today is dropping another 20%, and not because of this post. CABANKER seems to have some additional research that suggests that WM is not in such dire position. Rather than just bashing the writer, I'd like to hear the basis to belie his article. I am personally long on WM, and not happy with it.

SanDisk: Flash Sales 'Soft' in April at Retail

Harari's comments come to no surprise. There is nothing new. Oil prices are making a dent in consumers' budgets, and not only through prices at the pump. These high costs are permeating throughout the whole system. So, yes, we shall see a few difficult quarters ahead of us, for Sandisk, Apple and any company that depends on the consumers' truly disposable income. But flash memory is here to stay (and thrive!), and Sandisk is well positioned to take full advantage of the forthcoming growth. I am not that concerned by the lower prices; that is the normal trend with any product that is becoming mainstream, and are accompanied by lower costs. Lower prices get compensated by the increase in memory demand created by more devices and hungrier applications. Who buys a digital camera today that is not at least 8 MP? Just for the kicks of it, check out this artcile www.news.com/2100-1040... written 8 years ago. If we keep our eyes beyond the current economic turmoil, this should be a great opportunity to load on the leader of a technological revolution.

E*Trade Primed for a Breakout

Heated discussion here!! No need to get nasty. I am long on E*Trade, and not without some hesitation. I am confident that they are doing the right things, and I particularly rely on the strong equity of their brand. But no doubt their financial situation is still fragile, and the economic and financial environment is not helping. Highly unlikely, but this is a company that could be pushed into bankruptcy not because of their wrongdoing, but because of adverse conditions should a second shoe drops on the credit crisis or the economy folds under the weight of high oil prices (this is my main concern right now). Having said that, I don't think E*Trade will go back to $2-$2.50. That was a panic bottom, not a technical one. If you remember, the sky was falling at that time and judgement day was around the corner. I would not be surprised if the share price goes to the high singles by year end. It will take several quarters for it to break the $10 mark though. I would not expect it to happen until next spring or so. I certainly hope to be wrong, and would be delighted to have a nice Christmas present, but I certainly don't expect it. Yet, we are talking of a great risk-reward profile here. Chances of losing half of your investment: very low. Chances of doubling your money: very high. That sounds good to me!

The Beginning of the End of the Credit Crisis?

I think the worst panics of the credit crisis are behind us as there is slightly better visibility of the level of exposure and vulnerabilities of the financial sector. Yet, the sector is still fragile. Add to that an oil-driven inflationary recession with no end in sight (with the consumers' disposible income shipped overseas to pay for oil) , and Lilguy is spot on. Skepticism and caution prevail in these conditions. I am optimistic though: the US economy has proven extraordinarily resilient. One would think the kind of run up in oil we've had would be enough to take it to its knees, and yet, it's chugging along. But it will take a burst in the oil bubble to see consumers optimistic and spending again. And that is unlikely to happen, since by all accounts, this increase in oil prices is truly demand-driven. Too many people having cars and electricity in too many countries. How ironic, isn't it? The premise of globalization was that by promoting the economic development of the world, everyone would be better off: more developed countries would mean more consumption and more production, raising everyone's quality of life. What nobody seemed to have taken into account is that the basic resources for production are limited, and that more thriving economies mean higher demand for those limited resources and therefore escalation of prices. Time for some serious disruptive innovation in the energy sector.

The Brazilian Economic Miracle

It still amazes me to corroborate what the right government can do for a country. I've worked with Brazilians for many years, and I've always been impressed by their business-smarts, their shrewdness and their professionalism. And yet, it was always sad to see such a rich country and rather sophisticated people struggling with poverty and underdevelopment. It was hard to believe so much talent could not pull the country forward. I am glad to see Brazil's vigorous revival.

Was Peter Lynch Wrong? Crocs and Other Trendy Companies

I've written a couple of articles in my site about this same topic. It is possible to identify great companies and great products that meet fundamental consumer values and should generate significant returns over the long term by observing their action in the marketplace. By the same token, and paying close attention, it is possible as well to discern which are just fads or niche products. Nothing wrong with riding Crocs all the way to $75. But that was it. There is nothing left in that stock. The most serious financial mistakes are made when people consider these declines as buyable dips. Crocs is not a $75 disguised as a $12 one.

Penn West Energy Trust: An Underappreciated Gem

My only regret is not having purchased more Canetic Resources (now absorbed by PWE) a year and a half ago when I got to know about Canroys -thanks to Jim Cramer by the way; one of the few things I could thank him for-. Besides the dividend, that just for itself justifies the investment, the run in oil has meant a decent return in share price as well. I plan to continue holding on my PWE position. I think your analysis is right on.

Why Google Invested in Clearwire

As dominant leader in the online search and advertising market, Google's fundamental strategic opportunity to generate huge growth is to increase distribution: have more people spending more hours online. Not that different from Coke -or any other mass-appeal marketer for that matter- placing vending machines in everyone corner. In that sense, tearing down any barrier that might keep consumers off-line plays directly in Google's favor. Google will throw all its muscle behind any opportunity that allows them to capture what is now dead off-line time: think commuting, travelling, lunch, leisure, etc. Literally billions of ad/hours (clicks in their ads!) they are not reaching now. Their dominant market share would assure them by default 70% of that new revenue stream. That is the limitless promise of WiMax. All the points made in the article are valid, but basically basically point in the same direction: expanded distribution is the main driver behind these investments. This is a real smart use of resources. Gosh, they're good!

On Yahoo/ Microsoft: Jerry Yang Should Be Fired

Interesting action on YHOO today. It seesm the doom and gloom scenario didn't play out. The market is waiting for Act II and I think we will se more of this MSFT-YHOO deal. bill d: hold onto those options. You may break even. In any case, I seriously doubt YHOO has any significant future. As per MSFT, I think their corporate culture is way screwed up as to ever build a significant presence in the Web. The would simply smother anything they touch. Gosh, even their software is flailing! (Vista anyone?)

What Should Microsoft Buy Instead?

Extraordinary article! In all the intensity of this Yahoo-Microsoft almost-deal, we might have forgotten to ask the most relevant question in the first place: why does Microsoft need Yahoo? Which is to say, how come Microsoft, with all its might, has been unable to build a relevant, coherent Web presence by itself? In part, this link to an incredible video in YouTube entitled "Microsoft Re-Designs the Ipod Packaging" explains it: www.youtube.com/watch?...

Microsoft has grown to be a soul-less corporation that has lost touch with what consumers value today. Yahoo is not far behind -hence its woes-. The difference between these two companies and the portfolio mentioned in your article is that the latter includes true representatives of the Web 2.0 ethos: nimble, personal, creative, emotional. I am afraid Microsoft's corporate culture will simply smother everything it touches. It is good that the deal Yahoo-Microsotf didn't take place: most likely, it would have been another AOL-Time Warner or Sprint-Nextel.

Earnings Preview: General Motors

GM is doing the right things in terms of their product line up-and the marketing of their different brands. They have raised the bar in terms of brand equity, segmentation and product design. I've devoted several articles to analyze this turnaround in my site. The confluence of a weaker dollar, more attractive offers and innovation (moreover in their Cadillac and Chevrolet divisions) should position GM to emerge as a stronger company from the current economic downturn.

Earnings Preview: Starbucks

It is hard to believe that competition is having only a minor impact on Starbucks situation. Consumer will not drink less coffee because of the economic situation, but they will drink less expensive one. It is typical case of demand elasticity, aggravated by the fact that the quality of the competitive product (from McDonalds to DD) has not only improved, but in some case surpassed Starbucks'. Starbucks needs more than to refocus on coffee: it needs to reinvent the experience, and that is a tall order.

Am I Too Much of a Pollyanna on Starbucks?

As much as it hurts me, I think Starbucks is in a difficult strategic position. Starbucks taught America how to drink coffee. That served them well, and being the only real choice for many years, growth just followed. The problem is that they also taught their potential competitors how to prepare coffee. This is the typical cycle of disruptive innovation. The consumer now has choices, and at a lower price: not only McDonalds, but DD and other smaller coffee houses. Starbucks coffee is not the golden standard anymore. The only real advantage they have at this point is their distribution. Hard to grow on that one alone. Their real opportunity to reactivate growth: aggressively leverage their brand internationally, where the Starbucks experience is still innovative and aspirational. Until an aggressive international expansion strategy is not presented, you are better off betting on McDonald's coffee... and salads.. and burgers...